Wednesday, December 28, 2011

We have had a very good year, capped off by a strong December. For a while, the year was driven by CCG sales, to the point of alarm. Sure, we want many happy CCG customers, and we've done a lot in the last year to accommodate that growing crowd, but the card shop mentality is a cautionary tale. There is a cynicism that develops with the casino like quality of the product and events. The worst part of that cynicism is how CCGs tend to crowd out other games. Those dollar signs in your eyes can blind you to the roots of the community, the guys who will still be coming in long after CCG burn out has taken hold.

So I was happy when I ran the numbers and realized that our success in 2011 wasn't entirely due to CCGs. Sure, CCG sales were almost double from last year, thanks to strong Magic, Yugioh and even Pokemon releases. Konami especially seems to be on a new strategy of releasing things that don't suck. Good for them.

The closing of our competition in the CCG arena turns out to have had very little to do with this success, by the way, knowing the kinds of numbers they were pulling in. The goal there has been to comfortably integrate our more aggressive new players into our more pastoral casual CCG community. I believe that has gone well. Our Magic community has grown tremendously and I know they'll benefit the most when we add more space (which I'll discuss later).

In the case of Yugioh, it has been about increasing the flogging until morale improves, literally adding security until behavior changed. The latest round is from the airport security playbook, with no bags or backpacks allowed in the Game Center. This resulted in our volunteers quitting in protest and our first "tournament organizer" employee at the store. Having someone paid to run events is pricey, but by removing the usual organizer incentive of card trading (which the no bag rule hinders), events run much smoother. Things are much improved and player theft has been reduced.

So how did we do in other departments? Such sedate departments like RPGs were up 25%. It was the year of Pathfinder, with sales outstripping Dungeons & Dragons two to one. Around March, they were equal, but the writing was on the wall as I explained in my Inflection Point blog post, one of my most popular posts of the year. We had a tremendous number of people starting Pathfinder in 2011 and a clear perception that D&D was in that twilight period with a new edition on the horizon. Monte Cook, of Third Edition D&D fame, has moved across the country to work for Wizards of the Coast again on a big project. I wonder what it is? For the future, I neither expect Pathfinder to rocket this high in subsequent years nor D&D to suck quite so much. Instability makes retailers nervous and RPGs are definitely in a variety of transitions.

Miniature games were looking to drag us down by the end of Summer, but they ended higher ever so slightly. 40K had a slow release year. Fantasy had some bombs from a sales perspective. Ogres did poorly (we had rulebooks on clearance) and our Fantasy customers complained about supplements they neither asked for, nor wanted. Games Workshop remains that space alien that nobody can figure out. There's just too much money in that company for them to make decisions that make sense to mere mortals. Malifaux grew steadily, despite a pruning of the stock. However, it was Warmachine that knocked it out of the park and kept the miniatures strong.

This was due to a couple factors. First, Privateer Press got their act together and declared a "core" list for us to pursue and then actually provided the product. The core list allowed us to have faith in the core, meaning we were likely to have success if we always stocked those items. It required that we hunt core stock down wherever we could find them and it gave our customers the confidence that we would have a reasonable stock level. In the past, what we had in stock was based on metrics of what sold, which was entirely about the ten people who were playing in a static community. Occasionally, entire armies were just not there, because "nobody played them." That period is over.

The other big factor is better support. We have two employees on staff who play the game and know it well, Brendan and Charlotte. We have customers who come in asking for a particular employee when they have questions: Michael for RPGs, and now Brendan for Warmachine. I'm alright with that and I love having expertise on staff. That product knowledge has helped sales tremendously. The other factor is our new Warmachine night on Wednesdays, now that our old organizer Dave is back from Iraq. He does a good job of bringing in new people, with our Sunday morning group being a more casual experience for veteran gamers.

Board games, in which we couldn't point to a clear holiday winner, were even up 9%. Despite deck building game fatigue, that growing segment led to strong sales. Almost all our growth in board and card games in 2011 was in card games. Most of the exciting board games for 2011 seem to have come out in December, and hopefully won't be overlooked in 2012. Our board game night continues to be run professionally by our volunteer Joe. It has been moved to Monday nights due to overwhelming growth of Pathfinder Society on Tuesdays. Joe is a great organizer and has encyclopedic knowledge of board games, especially classics. He's our go-to guy with our board game questions.

What else? Miniatures turned around after I declared a "core" selection of Reaper models based on their best seller list. I took the Warmachine approach and basically said if this doesn't work, we're done with it. It worked with sales up 27%. Again, we hunt down that core product wherever it may be.

Miniature cases were up 36% due to the popularity of Battlefoam. Yes, it's expensive, but it's top quality and the supply is steady. We're now done with Sabol except for trays. We sold our last bag this month, a bag that used to sell four times a year that hadn't sold in 18 months. Battelfoam is just better. Nobody really buys Games Workshop cases anymore and GW knows it. Technology has moved on.

Finally, did we make enough money during the last quarter to expand our game space? Time will tell. It seems we got a large chunk of it, but it will depend on sales between now and the end of January. From a business perspective, the end of December is about reducing taxable income, so we pay off every bill in sight to make the money go away. The real profit is taken at the end of January when the smoke clears. What we have on February 1st is what we made during the previous year.

I'm optimistic, both about expansion and about 2012. At the macro level, there was concern that strong holidays sales were a result of consumer indebtedness, but now reports are in that people spent money they had or they used credit cards they tend to pay off each cycle. The fear was strong holiday sales using debt would result in a hangover in Q1 as consumers slowed spending to pay that off. That doesn't appear to be the case, as it was in 2011, when January sales tanked after a so-so December.

We've also got new events driving revenue, such as our Star City Games Invitational on January 7th, and general excitement about the next Yugioh and Pokemon sets. We'll learn if Magic will continue it's winning streak in a week or two when some of the spoilers for the next set come out. Meanwhile, we'll work to improve our events, dial in exactly what you guys want, and hopefully get closer to our big expansion goals.

Finally, it took seven years to get to this point. Our limited success is based on a very idiosyncratic set of circumstances, including staff, extremely local customer base, money from trees that are extinct, and the whims of the industry to provide product. Our return on investment (ROI) is something like 15-20 years. I mention this because I know we have competitors planning to pop up in 2012. I have no desire for a second store (it's a recurring nightmare actually), but if I did, I have several good locations in mind. Talk to me before opening a new store and I'll gladly name them for you. Maybe it will make the nightmares go away.

Friday, December 9, 2011

Amazon existed before I had a store, so it was part of the eco-system when I entered the retail gene pool. I accept this. Sure, they've wasted a billion dollars of investor money to become profitable, taking a decade to do it, but hey, that's their business. And sure, they desire to evade sales tax and deprive states of much needed revenue to fund schools and public services, but hey, that's really a battle between them and other big online retailers and it's likely going to take a government solution. I've weighed in on that, but it's not really about me. However, this week they've gone a bit too far.

This article talks about how Amazon is encouraging customers to visit stores, scan items, walk out and buy online from them. Now that's just plain wrong. Here's something I learned when I was younger. When you enter a business and engage a sales person, you have entered into a social contract where it is expected that both of you are acting in good faith. The sales person honestly and factually attempts to assist you, while you have intention to actually buy. It's alright if you're "shopping around," or not ready to buy, but the intent should be that the sales person has a chance at some time in the future.

The assumption is that you're not wasting their time, stealing from them. It has always been this way. I had this explained to me by a car salesman who I had wronged, not giving him a chance to even negotiate on a car that he had spend time with me looking at. It took some giant brass balls for him to tell me this, but I credit him. I bought the car from someone else on a whim and had brought it to his service department. I was oblivious to these kinds of social constructs and I was in the wrong. It's what happens when you're focused entirely on the price of things and are oblivious to things in life with actual value, you know, like people and communities. It's a pitfall of being from an online generation.

Other things you notice as a store owner. People will walk into a store and not say hello to the person there, or if they do, they see that friendly hello from the store employee as a cynical ploy (thanks Wal-Mart). People assume assistance from sales people is likewise a cynical job requirement of the employee. My usual question: Are you finding everything alright? The usual answer: an instant, pre-programmed yes, followed by, well no, I'm looking for.... We're losing our way as a society when basic social constructs like this break down, when a "hello" becomes a loaded threat.

So this is what Amazon wants you to do. They want you to walk into a store, waste the time of the employees of that store, crap all over the social contract, use the store to research your wants with no intention of buying from the store, and then shop at Amazon. It's a scummy thing to do. It's wrong, immoral, and hopefully you can see where a store owner would be outraged at this. It's not enough for Amazon to systematically gut various brick and mortar industries with the help of Wall Street, in an incredibly inefficient manner, moving on to the next trade after they've sucked out the marrow from their victims. They want more. They want to draft you into their war on local communities, on local people. Do me a favor. Don't be that guy. If you're going to shop Amazon, shop Amazon. Just leave the brick and mortar stores alone.

Tuesday, November 29, 2011

My lust for an unaffordable performance upgrade on my car got me thinking about the various stages of game space in a game store. Most stores will have a fixed game space for their entire lives. If they move, they might upgrade. Upgrading in place happens sometimes, often by taking over adjacent spaces. Sometimes you can go up or down as well. We're considering upgrading our game space next year in some fashion or another. Here's how I see the various game space stages:

Stock. That's it, you've got stock and no game space. You can run a game store without game space on pure retail principles. You can do it on a 9-5 basis. You don't have to be in a shopping mall to do it. You don't have much of a community, except those who appreciate you having things on the shelves. I did this for several years and I could have made a very modest, limited living from it. From talking with other store owners, I think stores that start without game space do better when they finally get it (not that I would recommend you go without it). They're forced to face retail head on, rather than chasing easy sales from events. They're better rounded retailers. No department is really hot in the Stock stage, so you learn to sell everything equally well. The car equivalent would be telling someone the best performance upgrade they could buy is driving school.

Stage 1. This is what we have now. After a bunch of research, I figured if we could accommodate around 60-70 people, we could run most single events, and sometimes two small events simultaneously. I thought this was the sweet spot for most game stores when I researched it, and I still do. However, now I want higher performance (to continue my car metaphor). I don't want to be most game stores. For us, Stage 1 has been 1,000 square feet of game space, custom made by dividing our retail space. Some stores will use temporary partitions and shelving with wheels to accommodate events of this size.

Stage 2. In stage 2 you can seat roughly twice as many people as Stage 1. Let's call it 125 people. Stage 2 means you can run two full events simultaneously. You can run mini-conventions. You can run the next cut-off for CCG events. If you see yourself as more of a regional hub, you want Stage 2. The cost of this is usually prohibitive though, and you can't really fake it with partitions and other tricks. I can't imagine going this route unless you were: a) very well established (AKA profitable), or b) not paying full retail rent for your game space, or your rent was already on the low side. Stage 2 is my desired next step for my store.

Stage 3. This stage can seat 250+ people. Now you can run everything in Stage 1 and 2, but also the big events, like Yugioh regionals, very large Magic tournaments, and you might even be able to convince manufacturers to run events in your store that might have been run in a hotel. My guess is people will come to you with event ideas. Very few stores do this. It's serious high performance territory and if you're a retailer and know of stores like this, I would love to hear about them. My Stage 2 plan will hopefully include the option for Stage 3 later on, like most automotive performance packages.

Friday, November 25, 2011

So what has been hot this season? It's a combination of some classic games along with some interesting new releases. Here are our best sellers since Summer:

ELDER SIGN: Think of a faster, less expensive Arkham Horror. It's a cooperative dice game for 1-8 players. It's not quite a filler game at 1-2 hours (depending on the number of players), but it's still something you could break out while waiting for friends to show up or your slow server at Denny's. It's our best seller this season.

DREADFLEET is clearly more miniature game than board game, with beautifully detailed plastic sprues that need assembly and painting. It's two players only with tactical rules that fall in complexity somewhere between a typical strategic board game and a more complex miniature game like 40K. You can play a game in an hour and it's suitable for older kids. It's stand alone without any expansions planned. It's not cheap at $115, but you get a lot for your money.

SETTLERS OF CATAN: The big daddy of all Euro board games, Settlers is a perfect game to gift to friends and relatives that have even an inkling of interest in board games. It's a gateway drug to a whole world of card stock enjoyment. It does 2-4 players, 5 with the expansion, and works as a semi-cooperative competitive game where you have to negotiate your way to victory. It's a more modern take on the winner take all classic, Monopoly, and has gained fame over the last year as a game played by Silicon Valley executives.

LEGEND OF DRIZZT: Yes, I know you hate Drizzt. Show us on the miniature where the bad drow touched you. Still, it's a good game in the Dungeons & Dragons board game system. "The Geek" still gives it over an 8 on the snooty grognard scale, and that means something. It's cooperative, does 1-5 players, and is a great dungeon crawl alternative to a D&D game if that unreliable player tries to ruin your session again. We grossly over-ordered on this one based on sales of the older game and still have a bunch in stock.

BLOOD BOWL TEAM MANAGER is a card based version of the Games Workshop miniature game based on fantasy armies playing a brutal game of football. The teams vary in strategy, with some more brutal or more likely to cheat than others, and is supposed to last a typical Blood Bowl season from the miniature game. This is another in the line of lighter, "remember when we had time" games that you can whip out with an old gaming buddy while they balance a toddler on one knee.

What else has been popular? In 6th-10th place we have:

6. Bang: The Bullet: The classic Bang card game with (almost) all the expansions in an attractive metal bullet case.
7. Hey! That's My Fish! Fantastic tile game for kids and adults that used to cost a small fortune but has been re-released in a $12 small box. The perfect stocking stuffer.
8. 7 Wonders: The winner of 29 awards, this card development game is perfect for your deeper, strategy gamer. If you like Dominion or Race for the Galaxy, give it a try.
9. Game of Thrones Card Game. The HBO series has brought a lot of people into this game this year. It's got a lot of strategic depth as you play one of the houses of Westeros. The box set is enough to play, but this "living card game" has a huge number of fixed deck expansions, and we regularly have Game of Thrones store events.
10. Star Fluxx. A science fiction version of Fluxx, with ever changing rules and win conditions. It's one of those filler games that's considered a staple of gamer households and is another great stocking stuffer this season.

Others to check out: Walking Dead (by Cryptozoic), Panic Station, Guards! Guards! and the Quarriors Dice Building Game that would have been higher on the list if it had been more available this season.

Wednesday, November 16, 2011

One topic store owners tend to keep within their circles is the issue of theft. Theft, both internal (employee) and external (customers) is so endemic to retail that it's a line item and gets a special name: shrink. Shrink can be as high as your net profits, at least if shrink is on the high end of the range and profits are on the low end of the range. It can average as high as 5% in some stores and still be considered normal, or it can be off the charts and your store can die a brutal death of a thousand cuts. So what is shrink really?

Shrink is a nice way of describing how your inventory is somehow smaller without the requisite cash from sales. It shrunk. No need to throw heavy words like theft or shoplifting out there. We just have shrink. It's caused by three things. In order of least denial to total denial: customers stealing stuff (bastards!) employees making errors in receiving or selling items (no, really?), and downright employee theft (not in my shop!).

In my mind, I always blame the customers for shrink first. It's far easier to accept than my employees are stealing from me or that we're making errors in a big way. It's often a combination of all three. A large part of what we do is attempt to train employees to prevent customer shrink, far more than preventing them from making errors. Sadly, I've let an employee go because they couldn't do this, either because the employee was stealing or because they became an easy mark by not paying attention. I'll give them the benefit of the doubt. Still, firing someone because they're just not very observant is kind of rough and I inevitably blame myself for not being able to train them better.

There's also the more malevolent employee who systematically stole, and at this point I think we can describe some of their activities as embezzlement. It's a time honored tradition in the game trade, embezzlement, but it still sucks when it happens to you. If someone wants to steal from you, they'll find ways to get around your procedure. It will work for a while, but the bottom line doesn't lie, providing you're paying attention. We have increasingly strict procedures for cash management that should show discrepancies. My disgust from this is pretty high, and without giving you a motive, let me just say that in another time and place, a more permanent solution to their character flaws would have been found.

This is all very technical, but what you don't often read about, what is hard to grasp, is what all this theft does to you personally, the store owner. If you had a lot of faith in humanity before you had a store, it's certainly put to the test now. You start looking at why people do these things, you question their motives, their upbringing, their sense of entitlement, and societies lack of caring that you've been harmed. Especially with employees or business partners, you trusted them, treated them fairly, maybe even became friends with them, and now this. My advice is if you're a happy go lucky kind of person and you want to stay that way, keep clear of retail.

Society doesn't much seem to care either. The district attorneys office won't investigate bad checks and the police take an hour to show up even when you have a shoplifter on site. It's very easy to get jaded about this, to feel you're the only one towing the line, that only you can reset the balance in the universe. You can go all Batman on this. Plenty of stores have failed when the owners have stopped towing the line themselves. It's usually a seizure by the board of equalization for not paying collected sales tax, which are honestly, a higher percentage than my net profits. The BOE here in California is an understaffed, government office with arcane practices and stiff penalties that works entirely on the honor system. I wouldn't dare slight them or even mention them in a tone that wasn't hushed if I wasn't meticulous about my own bookkeeping.

So retail hardens your heart a bit. It tests your own morality. It makes you temper your compassion with some fairly laser focused wisdom to see through bullshit. To understand retailers, you need to understand how they share their profits with everyone ripping them off, everyone stealing food from the mouths of their children, the various government agencies that extort cash from them, like the county farm bureau that now collects hundreds of dollars from us for having a point of sale machine. You have to get this to understand their minds, especially compared to more ... whimsical ... elements of the game trade.

This has been put into sharp contrast lately with my experiences on Google Plus. I now follow a bunch of RPG designers, whereas on Facebook it's mostly store owners. I recently offended someone by describing the rantings of designers as a visit to the Elemental Plane of Bourbon. In other words, the imaginative daily lives of an RPG designer is intensely alien to someone wondering if that kid in the corner just stole a Red Bull, while simultaneously managing a budget in their head of several hundred thousand dollars. It just seems so freakin' trivial and drug induced. The designer rants that is.

Retailers promote a hobby of fantasy and escape, but our businesses are run on some hard scrabble practices. Ever see a store owner that only turns on the lights when a customer walks into his store? Crazy, right? It's that thin a line between success and failure for many retailers. Don't think that guy doesn't know what it costs per minute to have those lights on.

As a retailer, your sense of wonder can be shattered through these practical day to day attempts at not getting eaten alive by the shrink monsters. That's when everything seems like a widget, when employees become overhead, and customers are a necessary evil. Thankfully, we have our fantastic, bourbon inspired games and we don't sell widgets. Widgets have a much higher profit margin on the up side, but games, games provide an escape. Games are a way to recharge the batteries, to experience a sense of the heroic, to add some humor, Games open up spaces in our minds so we can be a little more compassionate to those around us, bringing back some of our faith in humanity.

Tuesday, November 15, 2011

If you're a regular customer and you even hint that a board game is good, I'll likely bring it into the store, often without a pre-order, but a pre-order is always preferred. This is pretty much true with RPGs and occasionally a CCG. One of the most important thing in this job is to listen to my customers, especially when it comes to game selection. They'll often know more than me. There's just too much out there.

However, if you want to talk to me about a new miniature game, you'll probably meet with strong resistance that even surprises me sometimes. Miniature games are the most stable, most predictable, most resistant to change part of the store. There are reasons for this.

First, there is no dabbling in miniature games, unlike the request to bring in a $50 board game, a $100 box of boosters or a $200 line of RPG books. Miniature games don't work that way. We're talking about half a dozen starter boxes to start ($300) which really doesn't get you very far. Then we've got additional models that will likely add another couple hundred bucks, eventually leading to thousands. And for what? It's so one guy and possibly his buddy can play each other. That's great for special orders, I like free money, but the demand is usually that we stock this game, in the (customer risk free) hope that more people will play. Sounds like an opportunity, right?

Rarely. It comes down to how people play these games. Miniature games are expensive, and while a board gamer or RPG hobbyist will buy multiple games or game systems, most miniature gamers have room for one core game and often one, one-off, "break" game. Games Workshop understands this, so they'll encourage people to play Mordheim, Blood Bowl or Space Hulk for a while, with the understanding that they're recharging their batteries before diving back into their core game, 40K or Fantasy. So at best, that new miniature game is the break game, and at worst, the break game becomes their new core game.

I say worst because inventory is a zero sum game for a store. A new product line is an inventory budget suck. Would I rather you play a new off-the-shelf 40K army, or would I rather spend $1,500 on a new thing for you to dabble in (my current Malifaux stock number)? Duh. And what happens when Shedworks Games goes out of business, inevitably raises their prices and alienates everyone, or allows a third grader to write its next expansion? That's right, clearance bucket, the lot of it. What happens to that customer? If I'm lucky they return to 40K, their core game, and if I'm really unlucky, they discover the new panda expansion for World of Warcraft and I never see them again.

Even when a game is moderately successful as a "break" game, there comes a time when it inevitably begins to wane as all the miniature hobbyists who play that break game finds they have everything they need. After all, it's the break game, they're not looking for infinite expansions and new armies, that's what their core game is all about, that's why they're taking a break. So what we see is a slow build up of a new break game (Mordheim, Infinity, Malifaux), followed by strong sales, a long decline and a total crash. It's not that players hate the game, it's just that they have what they need. They've taken a break. They still play those games in our store, they just don't need anything else from me, thank you very much.

So how do you make a new miniature game work in a store? First, I listen very carefully and have a much higher bar for bringing in a miniature game than other types of games. Second, I consider the source. Do I know this customer? Am I likely to see sales from this guy, or is he a perpetual dabbler that loses interest quickly? Third, can I get some play? Is there someone involved in this transaction that is likely to run events, even if it's a time for him and his buddy to play on our tables at a set time?

Ideally a staff member gets all excited about this, which is often the key in game stores that do well in this area of the trade. Finally, have an exit strategy and be clear when the run is over so you can recoup your costs and move onto the next game, preferably by selling off stock outside the store. Nothing is worse than training your customers to wait for a clearance sale.

Miniature games are the hardest nut to crack in the game trade, a nut that is likely going to blow up in your face and ruin your day if you're not careful. It's far easier for a game store to do something else instead: take a chance and go deep on an RPG, expand their board game section, or throw money at their Magic singles budget. Miniature games? Buckets of "dead lead"? Now that takes some true dedication. That's opening nuts with laser beams.

Saturday, November 12, 2011

Battlefoam bags are made from Kevlar, which you may know as a material made by DuPoint for bullet proof vests. Sure, it's also used for racing sails and bicycle tires and all sorts of things that aren't designed to stop a bullet, but the vests are how you remember Kevlar. This, of course, meant that eventually someone was going to shoot a Battlefoam bag. And because we live in the age we do, it was going to get recorded on video. Yeah, we did that.

Romeo makes it look so easy. This was all in good fun, of course, and nobody was expecting the bag to be bullet proof. If you do care at all about ballistics, the .45 round came the closest to wrecking the bag. I was a little surprised when we opened it up because I thought the bag had plastic inserts, but actually has thin, stiff particle board. There were wood particles everywhere, and the .45 round spider webbed the front wood insert on impact, while the other rounds went straight through.

Wednesday, November 9, 2011

I've now had a store long enough and a mouth big enough to be a go-to guy for prospective store owners. Lately I've seen an increase in such visitors. It's not unexpected. I think there is a huge pent up demand for new businesses with lots of people waiting for the economy to improve. All the indicators say that if Europe doesn't crater, 2012 will be the year to make a move. There seems to be money out there, despite tight credit and the car crash of a housing market. Money looks to be coming from unlikely sources, including overseas.

When I get visitors, my job, as I see it, is to explain the harshness of the game trade. I love my job. I love going to work in the morning. I'm proud to own my own business. But it's a literal labor of love. It really doesn't make financial sense to do this and it's hard for me to justify re-investment, which is where I'm at now. We're looking at expansion, but the brain it took to make the money has a hard time coming to terms with spending it, compared to more rational uses of capital.

Anyway, here's an example of a recent game store scenario we discussed. The average game store in this country has gross sales of $250K a year. Lets ignore that. Lets swing for the fences. Lets create a game store that does a cool million in sales each year. There are maybe one of these in every major US market that has a gaming sub-culture. They are the 1%. None are created overnight, most are not created rationally, they evolve organically, despite the best efforts of their owners, but lets pretend.

For your million dollar store, you'll avoid the "shock and awe" approach of dense, slow turning, inventory and instead use smart inventory management. You'll invest maybe $100,000 in setting up your shop and start-up losses and another $100,000 in inventory, assuming this will eventually get you 5 or so turns ($200,000 of inventory at retail gives you your million dollars with 5 turns). Assuming you make all the numbers work, which again, I don't think is reasonable or rational, your $200,000 investment is getting you your million dollars a year in sales. Voila! You're a millionaire!

Well, no. Your gross might be high, but profit margins are thin in retail. A good assumption is you'll make about a 5% net margin, or $50,000 a year. (before taxes). So you're on a beach somewhere, at least in theory. That can happen. It's rare though. The reality is that you'll have so many balls in the air, you'll have a hard time getting much tanning done. More than likely a lot of that fifty grand will be used to pay off your $200k in debt, unless you happen to have that money free and clear.

If you do have that money free and clear, what else could you do with it? How about sit on a beach now with $20,000/year? It's not as nice a beach, sure, but there's very little risk and far fewer interruptions. That's the return you'll get, on average, if you just invest it in the stock market.

How about buying a business that has a reasonable chance of success? A Subway sandwich franchise costs between $100k-$300k and is rumored to have a profit margin of around 25% (minus 8% to Subway). You know what else you can do with a Subway store? You can sell it when you get bored. Try that with a game store. Ha!

There are a lot of intricacies in something like this, and I'm not saying Subway is the answer, it's just symbolic of what's possible. However, I can promise you, running a sandwich shop is going to be vastly easier than a million dollar game store. I think of this all the time. It's where my rational brain goes when my gamer lobe (a vestigial mass missing in most people) thinks about a second store. My point is if you're investing "real" money, in an intelligent way, perhaps it's time to separate your business brain from your gamer lobe.

My motivation in writing this is to avoid failures, especially the constant flailing I see in my local market. Every gamer with a lawsuit settlement, dead uncle or rich buddy dreams of running a game store. It's rarely a rational choice. A good game store competitor, with a solid business plan, a site feasibility study, and an understanding of the game trade could potentially help everyone. A bad one hurts the community, erodes our sales and slows our growth before eventually becoming road kill. Most of the customers they once served drift off into other pursuits (competitors get a very small percentage of them), telling their children in later years about the cool games they used to play.

If you still have a hankering to open your own business, go build your sandwich shop, hire some college kid to manage it, and spend your evenings and your 25% profit margin (minus Subway's cut) in my store. Everyone will be much happier. If you just want to game and you think owning a game store is a method to do more of that, let me tell you you're way off base.

Saturday, November 5, 2011

In a nutshell: We've got 90 miniatures on the wall. We've got 90 miniatures on back-order. Back-order means Reaper hasn't supplied them to the distributors for us to order. When 50% of a companies inventory is unavailable, it's kind of pointless to run metrics. Charts and graphs aren't necessary to know that this isn't working.

We're not planning to drop them, mostly because it's impossible to even evaluate them when they're in such a constant state of fail. However, it's awfully hard to take them seriously as a product line with a 50% fill rate. There are some serious problems here.

Prices have risen dramatically over the last couple of years, to where an average model has jumped from around $3.99 to $5.99. Before this, it probably took five years to get from $2.99 to $3.99. You may have noticed Games Workshop has dropped metal miniatures from their entire product range. Who wants to be in the middle of a commodity battle between Indonesia and China? That's not where I would want my company. Metal miniatures are all about tin and tin is in short supply and high demand. Unfortunately, I don't think Reaper has much flexibility in picking their materials, unless it's some cheaper alloy, which they've messed around with in their P-65 line (lead alloy). They don't have vast quantities of anything that could be produced in plastic, for example.

There are cultural shifts too. Fewer people seem to be painting fewer miniatures, from what I can tell. They just don't get bought as often anymore, and I know many people eagerly awaiting the new Paizo plastic pre-paints to resume their miniature collecting without the butt pain of a tedious paint job. I could easily imagine the demise of paintable miniatures as a natural thing at this point. There is no game imperative to these things. They're just nice. Sure, there are things we could do to breathe life back into miniatures, such as table gimmicks to give players in the store in game bonuses for painted miniatures, or the good idea that never quite works how we want it, the painting contest. But really, does nobody want to do this for fun anymore?

I've gone from carrying every Reaper miniature in 2004 to just those 90 plus my wish list. This didn't happen by accident. It was a slow decline associated with the malaise in the RPG industry. During that time we went from six local game stores to just me. You would think we would see an uptick in mini sales then, right? Not so much. I'm sure some other store owner will tell me they're doing great with them right now. I can't say I'm hopeful, although I would jump on those 90 back ordered models if the opportunity presented itself. I even called Reaper to order some, but they were busy.

Our goal is to use Reaper packages to create a "core" selection of miniatures that we endeavor vigorously to keep in stock. Then we check the metrics on "core," and if they don't work (as happened with Flames of War) we drop it. If it does work (as has happened with Warmachine) we celebrate and engage further. Dropping Reaper is as inconceivable as Dungeons & Dragons not being top RPG dog. Oh wait....

I'm far from a hater. The way I often make my RPG characters is to find the miniature first and use it for inspiration for a character concept. "Aziz," above is the Moroccan Merchant mini from Reaper's Chronoscope line. I rescued him from our clearance bins where he had been sitting for weeks. I vowed such a cool model would one day be my character (Inquisitor of Abadar in a Pathfinder Serpent Skull campaign, sometimes called "The Morsel of Abadar"). He then sat on my nightstand for months before I could figure out his concept. He's not a great model, probably better suited in an NPC role, and he doesn't have a great paint job, but it was extremely inspirational nonetheless.

Friday, November 4, 2011

There are two types of periods when I delve heavily into our numbers, when things are down and when things are up, really up. We're thankfully in that "really up" period where our annual sales have skyrocketed. This is always worrying, because when sales are down, it's natural to tighten your belt, cut costs and act smarter. That is almost always the right thing to do anyway.

However, strong sales, really strong sales, are dangerous as it leads to stupid behavior. Really strong sales encourage structural changes, like expansion, new hiring, taking on debt, and the kind of stuff you regret later when you realize you were experiencing a bubble. We are in a bubble now.

CCGs this year have propelled our sales up 30%. A new store, lesser experienced store owner or prospective store owner might find this very exciting and could be tempted to make bad decisions. You might be inclined to start a new store to capitalize on this huge trend, which is obvious for everyone to see. Heck, we're looking to use the extra money to make some structural changes ourselves, but the thought is this is temporary, providing an opportunity to better position ourselves in the future, rather than the expectation that sales will continue to rise like this. Like the stock market, by the time you usually spot a trend, the opportunity to capitalize on it has probably passed.

What we see instead is slow and steady growth of around 6%, when you flatten CCGs and their supplies. D&D is on the ropes, 40K hasn't seen a new release in 6-months and it's a down year for board games. My holiday forecast is flat unless CCGs come to the rescue again. That 6% is still respectable retail growth but certainly doesn't call for big changes. Certainly stock better for the CCG crowd, buy some new tables and chairs, pay down debt and maybe even pick up some new fixtures or other needed things for the store, but my advice, if you're seeing what I'm seeing, is consider it temporary.

Thursday, November 3, 2011

One of the few blogs I read regularly is by Seth Godin, because he's insightful, terse and provides a laser focused insight that often applies directly to whatever I'm doing (AKA not my blog). His blog today was entitled Are You Doing Math or Arithmetic? As it's our 7th anniversary this month (our party with free tri tip sandwiches is on the 13th), this got me thinking about how I do things now, how I did things early on and how I think most people do things. And yes, that math analogy holds up pretty strong in my case.

To summarize the Godin blog post, there's basic, nuts and bolts "arithmetic" kind of stuff that people do in their jobs, which is mostly repetition, going through the motions. Most of this is necessary, but there is so much more. Then there is "math," which is cutting edge, intuitive stuff that includes as much art and intuition as it does science. The thing about running a game store is there's a lot of arithmetic. There is enough arithmetic, rote stuff that gets done over and over, that you could very easily think that's all there is. For most store owners, that is all there is. You could do that job, fail, and blame the system, because you had no idea there was actual math beyond your arithmetic.

My game store career involved doing an awful lot of arithmetic, in fact learning arithmetic on the job. Where most experienced retailers who had perhaps worked in other stores would show up with arithmetic skills, I was still learning the basics of arithmetic, sometimes literally, trying to process margins and discounts and trying to figure out exactly how the numbers were supposed to be crunched when it was clear they were made of granite. The key for my transition from arithmetic to math was both education, as in seminars in which people who seemed like me were doing real math, as well as pure frustration. Is this it? Isn't there more? Followed by questions like, "what are smarter people than me doing?"

Math turned out to be quite a few things beyond basic arithmetic for me. It's a ton of marketing, usually guerrilla style, almost entirely social media marketing nowadays. It's merchandising and displays that push the envelope. It's better event management, better financial management, better purchasing and forecasting, better staff management, and finding and allowing others to do some of the arithmetic (and even math!) so I can concentrate on my real job. It requires making a bunch of mistakes, to be honest, hopefully with enough foresight that they don't sink you. It's about being open to opportunity, even when your basic arithmetic skills say it can't be done. Math is hard after all. Math is constantly changing for me, I'm never quite doing it right, and my efforts and aim are never quite on target. But I'm getting better at solving the big equations and I have a strong sense of awe when it comes to better mathematicians.

So while I do arithmetic on a regular basis, and must continue to do so, the key for me is to remember I'm here to do math. Usually when I find myself in need of a break or change, it's because I've fallen into only doing arithmetic. It's easy and comfortable. Managers do arithmetic; owners do math. If as the owner I find myself consumed by arithmetic, those rote activities that can consume the day, I'm doing it wrong. I'm not doing my job of evil scientist, arithmetic genius in training.

Friday, October 21, 2011

I'll be selling someone on Pathfinder, something I love to do because it's fun and easy, and I'll begin talking about adventure paths and the customer will cut me short. "Yeah, yeah, I write my own adventures." And that right there describes the problem with Dungeons & Dragons over the past decade and truly why Pathfinder excels.

Wizards of the Coast has never really put a lot of effort into adventures. They've been outsourced, written by the rookie, and generally delegated to low priority. With D20, it was far easier to let other companies write adventures, which are clearly the worst selling category of RPG product. You've got one guy in five who might buy it, and quite a few like the guy in my example, who never intend to. Partly this comes from the creative desire to make your own world, to get some skin in the game, but mostly it's because adventures suck.

So they suck, they sell poorly, and they're a necessary evil. However, what I've learned from Pathfinder is they're critical. Well written adventures, especially adventure paths are the glue that holds the hobby together. They keep me running or playing in games for years, long after we would have grown tired of that crummy throw away adventure dumped on the wife of the core designer. They let me power through scheduling conflicts. They make people learn how to use Skype to get that one more player so they don't flame out during book four of their adventure path. They are a strong motivator to game on.

While I'm playing in these adventure paths, I'm buying accessories, additional rule books as they come out (there aren't that many, why not?), and generally telling everyone I know what a blast I'm having playing this game. It's better marketing than any poster or thing I hang from my game store ceiling that sets the burglar alarm off. They still don't sell that great from a store perspective, probably in the lowly 2 turns a year category for APs, versus a 1 for stand alone adventures, but they sell the hell out of everything else.

I'll also argue that that original guy who writes his own adventures is often writing them because of the suck involved, and not because of his desire to let his freak flag fly. There were once great adventures for Dungeons & Dragons, but you have to be a grognard to remember them. I'm reminded of this regularly when Wizards of the Coast sends out the coolest promotional adventures to reward their D&D Encounters DMs, like the one that arrived yesterday.

What ... the ... hell. My favorite adventure of all time is relegated to a secret handout to two guys. It's an adventure in which people will pay a small fortune for convention variant copies on Ebay. At the same time, I'm being given a steady stream of throw away adventures that nobody will buy. Should this not be reversed? Is there some deep, dark, clever corporate plan that I'm missing? Kind of like the new Games Workshop marketing strategy of not telling anyone what they're doing? Please, explain.

Better yet, if you're going to have a D&D 4.5, or 5, or retro revival, please consider the lowly adventure. Please put someone brilliant to head that team and don't let the marketplace sort it out. Otherwise you'll be relying on these weekly "encounter" sessions to keep the game alive rather than, you know, actually selling stuff.

Sunday, October 16, 2011

It's that time of year again when I order jigsaw puzzles for the store. Puzzles represent a category that I have yet to master, the seasonal item. Seasonal items are strange to me. I'm a gamer at heart and there's nothing that interests me in December that doesn't interest me January through November. Really, nothing at all, except maybe Italian candy. People that buy seasonal things tend to be the other, the muggle. We love muggles, the uninitiated, but their likes are not our likes.

There's also a danger to seasonal things. The big danger is you don't sell them during the specified season. Then what? Most stores sell their plastic Santas and Halloween candy the following month at a deep discount to eager customers. We lack that follow-up muggle traffic, so there will be nobody looking for our seasonal items for another eleven months. We've got Christmas jigsaw puzzles from last year that we're hoping to sell this year. What a waste of capital. We blew out our Christmas wrapping paper from last year sometime around March.

When it comes to jigsaw puzzles, I ran some numbers to see exactly how seasonal they were and found that I was ordering too late in the season.

What I discovered on this virtual back of a napkin was we actually sold double our normal puzzle numbers in November. With this data, numbers I'll often crunch when the mood hits me, I decided to order my puzzles in October instead of November. Our order this year will increase our selection by 125%. We basically ordered every new 2011 puzzle from Ravensburger and every top seller from Springbok. More from Pomegranate will come a little later. We've given up on Educa, by the way. They're far less popular and very expensive. People ask why. I don't know. It's a Spanish thing (they're from Spain, like our expensive Vallejo paints).

Building puzzle clientele is a kind of trial and error experience, mostly because we have a trial and error selection of puzzles. There are casual puzzle collectors, who come in mostly during the holidays and buy whatever looks nice, but the hard core puzzle collectors are a hard nut to crack. They have needs. They call with a bit of artwork in mind looking for a puzzle that may or may not have been created in this millennium. They're really no different than the rest of our gamers. Imagine if we sold Space Marines, but only the best selling SKU's and only the ones in plastic boxes, and only in December, and had no way to special order one we don't stock. That's basically how we do puzzles, which is weak sauce from a retail perspective.

Really what it takes to sell puzzles, I've discovered, is lots of money and lots of space to display what you've bought. It probably requires regularly ordering them, as opposed to what we do, which is order them two or maybe three times a year, only with some sort of promotion to defer costs. For example, by including a couple holiday puzzles from Ravensburger, payment for our large order isn't due until January. Dating (paying the bill farther into the future) is important for something that probably is going to be primarily a seasonal thing.

Of course, the biggest problem with puzzles is it's kind of an aging market. Yes, that sounds harsh, but very few young people come in asking for puzzles for themselves. If you put games on a bell curve by age of customer, you would get something like this:

In fact, you could write an entire doctoral thesis on hobby games and age with the problems in this chart. Not only are classic games becoming a bit obsolete with the aging population, but so are the hobby games. I would put Magic at an average customer age of about 21, 40K a bit older than that, but RPGs and board games tend to skew older.

This is also why you see us trying so hard to accommodate Yu-Gi-Oh, which represents a swath of the hobby game market that almost entirely owns the under 18 demographic. Compare that to the actual population break down and you can see it's a market under-served by the game trade:

One positive out of all these fancy charts is the coming geritocracy. If gamers can accept their hobby as a "life game," a term my father once described for such activities as bowling and golf, then they could potentially change what retirement looks like in the future. Shuffleboard and putting greens in retirement communities may one day be terrain tables and card tournaments.

Thursday, October 13, 2011

Here's the chart for Warhammer Fantasy Battles. It lacks the driving force of an iconic army that attracts new players to the game. Yeah, some armies are better than others, but when you think of this game, what army comes to mind?

Warhammer Fantasy Battles is our number seven most popular game. It outsells Dungeons & Dragons. It outsells Warmachine two to one. Yet, ask a regular in the store who exactly plays this game and they'll likely shrug their shoulders. It's a struggle to get organized play around this game, but it does happen. It's primarily for more "mature" gamers. They buy their stuff. They go home. They play. Old school. Amen. Anyway, that's how it works at our store.

Tuesday, October 11, 2011

I haven't done one of these in years, but you might find the army breakdown of interest, especially if you want to gauge the likelihood of coming up against an opponent locally. These are based on sales numbers, so there are clearly issues of both popularity and cost of army to take into account. If it makes a difference, I've been told our numbers tend to be reflective of overall GW numbers.

This time I've broken down "space marines" into various chapters. Space Marine (general) are all space marine things that are not chapter specific, so it includes generic space marines and all the supporting sales for the various chapters. If you bought a Rhino for your Space Wolves, it's covered under general.

Wednesday, October 5, 2011

The trend lately has been to shift the risk of carrying inventory to the retailer. The manufacturer makes a set quantity, the distributor offers a short window to retailers for ordering this product, and once the product arrives, it's all there will ever be. Sometimes it's just one product, like with Games Workshop's Dreadfleet, which is fine, but other companies have changed their entire business model towards forcing the retailer to shoulder the risk.

We see this from WizKids with Heroclix, Konami with Yugioh, and increasingly from Wizards of the Coast with Magic: The Gathering. These companies also tend to limit supply, even with pre-orders, ensuring there is no product available for a second order if the retailer runs out, forcing them to buy everything up front, and often leaving them in the cold when they inevitably run out.

This means that stores like mine have to buy thousands of dollars of new, unknown product, blindly. We can do some research, but nobody knows what products will run hot or cold until they're actually released. We put all our money up front, removing the risk for both the distributor and the manufacturer, and bet the farm repeatedly that the latest release will be a hit. It's a rather cynical way to sell a product, actually. Games we love become mere widgets that need moving before the shine begins to fade. There's no need to learn about the product, especially when it's offered in limited quantities. Stores end up treating customers with less respect as well. Buy it now, at whatever price we deem it to be, or suck eggs.

Inevitably it is the larger stores that do well in this model, as smaller stores can't afford to stockpile the thousands of dollars of necessary product. Our purchasing budget is about $8,000 over budget this month as all these companies have hit a perfect release storm. This is an amount of money that most stores can't just absorb when the bill comes due. This means that small stores lose to the Internet or larger competitors, which is not good for the game trade. Small stores bring a lot of energy to the game trade that larger stores often can't.

There is also no incentive to provide any organized play or events for items that will wash over the store and sell out in a short time.Why should I even learn about the contents of a box when the manufacturer has already declared it a one-shot widget? Those games, which are really the top selling games in our trade, are debased with these policies, devalued by retailers who see it as a one-shot cash cow, and inevitably they suffer because of this. Sure, there's excitement generated by the fan base, but all the benefits of this are at the top. Retailers report customers in their game centers playing with product bought at Wal-Mart or Target because their store couldn't provide it to them.

These widget releases also make us take our eye off the ball. The true, regular, rent paying sellers in the game trade are the sedate and steady role-playing, miniature games, and board games that rarely get such attention. When my CCG sales are up 300%, or I'm $8,000 over budget, do you really think I'm working meticulously to plan the next 40K or RPG event? Hell no, I'm high as a kite. I've got to burn off some energy and it won't come from Space Marines Tactical Squads. And when those CCG sales plummet and are down 30% when the next set sucks, what skills and practices will I have in place to keep the store alive? How has the staff atrophied from spending their time selling widgets and pricing singles?

As a retailer, I find this shifting of the burden financially destabilizing, demoralizing for staff and myself, and organizationally destructive as our sales and event skills for our core games atrophy. There is a reason veteran gamers hate these games. They can see these games are generally destructive to the entire gaming ecosystem.

Tuesday, October 4, 2011

Mayor Bates: Daryl, he wouldn't hurt a fly. I know my son, Colonel. He's not the guerrilla type. Colonel Ernesto Bella: According to records, Mayor... your son is a prominent student leader. Mayor Bates: Yes, well... he's a leader, but not in a violent or physical way. You see, Daryl... he's more of a politician, like his father. Colonel Ernesto Bella: A member of an elite paramilitary organization: "Eagle Scouts."

--Red Dawn, 1984

Over the weekend two questions came together with the same answer. The first, what characteristics make a good employee? The second, what values do I want my six year old to develop? The core work value I want to see in my business, and the one I think is key to the insane "new" world we live in, is adaptability.

The nature of work has changed, and those who expect a comfortable, static, job are likely to be disappointed or at the very least, on a dreary track of boredom, slow advancement and perpetual unemployment.Work nowadays is often what you make it, sometimes multiple jobs, sometimes jobs that are "beneath" you, and increasingly self employment. Small business is half of all non-government jobs in this country and I think that trend will only increase, and with small businesses getting smaller. Those who can tap into that, either with their own business, or bringing a creative skill set to another small business, will do very well. What is that skill set? Who knows? Who cares, really. The key is that you'll need to define new skill sets continuously and show some adaptability in doing so. I want employees to have this and I really want my son to have this. But how do you get it?

My experience over the last seven years with employees shows that those who have been Eagle Scouts tend to have the values I'm looking for. Not college degrees. Not a military background. If you're an Eagle Scout, that should always be on your resume, forever. It says something important about your character. The Eagle Scouts are the ones that have shown me the most adaptability, the skill in taking half a dozen disparate elements (my business, for example), and putting them together in some fashion that makes sense to them, on their own, without a lot of direction. They can clean bathrooms, design sales promotions, and come up with systems, all without complaining about the task or the nature of the work, and all while keeping their heads and adding value to the process. That is adaptability and it comes from years of similar scouting projects.

The down side for me is I really don't care for the Boy Scouts of America. It doesn't matter so much with employees, but with my son I don't care for the BSA's homophobia and I also don't care for their "people of the book" religious requirements. They expect every home to abide by a belief in God, which not only disqualifies atheists, but also Buddhists, Hindus and any number of religious groups. Sure, you can look the other way on these things, and the Bay Area groups tend to be almost completely free of these antiquated mindsets, but if you're someone of principle, who thinks they shouldn't have to hide their true nature or their true beliefs, it's hard to just ignore it. That's the dilemma that faces a non theist who wants their child to have the scouting experience. I think it's an amazing organization otherwise.

There's also no female equivalent of the scouts, at least one that's focused on the same values I'm looking for. Most fathers of girls I talk to agree with me on this. Yeah, Girl Scouts is good, but it's not the same. So I'll leave how to instill hard core adaptability in girls to someone else to ponder. Also, my female employees are no better or worse than most of the guys in their adaptability, so don't tell me it's a natural thing for them.

So adaptability and humility gained through hard work and a sense that there are just tasks to be done, not tasks that are above or beneath your abilities. If you've got a better way of getting that across, other than, you know, twenty years of excellent parenting, please let me know.

Saturday, October 1, 2011

Small publishers ask me how they factor into our sales numbers. The truth is no individual small publisher ranks when these pretty charts are put together. Another truth, which on the surface seems contrary to the first, is that as a whole, small publishers of all kinds of games are vitally important to us. The chart above lists our top 12 individual publishers with the highest gross profit. The Other category, for the remaining publishers, is still nearly a third of all our RPG sales. Other is worth quite a bit of money. Other is more than our Dungeons & Dragons sales and ranks number two overall.

Other is a lot of work, and definitely falls into the category of "ass pain." However, as has been pointed out before, this is the kind of ass pain that we signed up for. It's the service we provide to a number of our customers who call weekly looking to hunt down something they found online. Usually we get it for them. Usually it's Other. Also, nobody can compete in the brick & mortar space with our Other. They would be foolish to try.

Most Other books sell slowly. Most are one-shots, special orders or are unobtainable after initial release. Quite a few honestly never quite sell at all, ending up on our clearance shelves for long stretches of time. Still, they're important to the RPG ecosystem.Our RPG turns overall are at five. This means, every single book in the RPG section sells an average of five times a year. That's extraordinarily good, as healthy is around three. Sure, books like the Pathfinder Core Rulebook sell 90 copies a year and skew the numbers, but by managing the ecosystem, a retail store can accept some one-turn items, and quite a few one-shot risks. A lot of times there's just the illusion of choice which drives sales. What, illusion of choice?

For example of the illusion of choice, I carefully tracked dice sales for a year, pruning the ones that sold poorly. This is good inventory management, right? You keep the wheat and ditch the chaff. So what happened? All dice sales slowed significantly. How can this be? The same good selling dice were still there. Why would sales go down? It's the illusion of choice. You think you're being original when you pick the one in one hundred dice set, even if the reality is that people really only ever choose twenty five of those sets. The same is true with other departments. The illusion of a thriving role-playing section establishes in a customers mind that you have a respectable selection. You are showing them respect by offering choice. Then they walk over and buy the Pathfinder Core Rulebook.

Friday, September 30, 2011

Tomorrow marks the implementation of the bit of the Dodd-Frank Wall Street Reform and Consumer Protection Act in which debit card fees are capped. At its heart is a big battle between big retail (Wal-Mart, Target, and the like) versus big money (mega banks). In a rare moment of political weakness during the financial crisis, big retail swooped in and muscled away the big banks from the trough long enough to get congress to do something for them for a change. Despite this raw, ugly power play, the net result should be a positive, I think, provided you're not one of those people who think the rich know what's best for us as the natural masters of their domain. Let me explain.

At the technical heart of this law, debit card fees are capped at twenty four cents each. Average swipe fees are much higher than that. For example, we pay sixty five cents. Yes, you are yawning, but before you doze off, let me tell you that for a small business like mine, this is pretty big. With about 300 debit card uses a month, we save about $1,400 each year in fees. With our tiny profit margins of around 5%, we would need to sell $2,300 each month in games to come up with that level of extra profit. That's like an extra Saturday every month for us. Wouldn't you like an extra Saturday each month?

Critics will point out that banks will now be "forced" to charge consumers more for debit card use to offset their losses. If by "losses" you mean halving the profit on the $20 billion a year they make in interchange extortion, well cry me a river. They've managed to increase their profit margins from retail banking from modest levels to incredible heights over the years through various schemes, this being one. The system gradually squeezes retailers without recourse, other than to stop taking credit cards. It's a system that's so insanely profitable, especially compared to places like Europe, that they don't even implement technology to counter card fraud. It's cheaper to just suck it up while charging me a bogus fee each month to pretend I comply with make believe security. Maybe they should take fraud seriously if they want to re-coup their lost profits. But what about the consumer?

If the mega banks like Bank of America want to charge extra for debit card use, the consumer can tell the banks to suck it and move to a credit union or neighborhood bank, something I can't believe hasn't happened wholesale after the crisis of the past few years (I recommend Mechanics Bank). The big banks are not our masters and you don't have to do business with them.

So here's the good part. We're going to take billions of dollars from them and give it to main street. In my case, I've got $1,400 to spend. Do you think I'll put it in my hedge fund account? How about buying that new Ferrari I've been eying? Or perhaps I'll just add it to my portfolio where it will be thrown atop the stockpile of over a trillion dollars American corporations are sitting on, claiming economic uncertainty? Hell no.

My $1,400 will go to adding inventory from game companies, getting a few new fixtures from local manufacturers, hiring staff from the local community, or even paying myself more. As a middle class kinda guy, my personal expenses go back into the local community any way you slice it. Heck, I may even pay the banks back some of the money I owe them. So it's a win for main street and a win for you. Don't let the evil overlords tell you different. Definitely don't put up with them charging you my fees.

Sunday, September 25, 2011

Each year around this time I compile a list of our top selling board and card games. Usually I separate this list, which although appearing convenient, often devolves to discussion of what's truly a board game and truly a card game (not to mention LCGs and other models). So here they are together, as most game stores track them, as I've learned.

A few things. First, the top selling game is on the top left. Game 51 is on the top right, so it goes down and to the left. Second, this is ranked by profit, as opposed to quantity sold. Third, all expansions are stripped from the list, although a stand-alone expansion that can be played by itself is exempt. And fourth, this is just our list and has little relation to other stores lists . It doesn't mean anything..

A lot of these games have stories around them about how they were reviewed in the newspaper for a while, how an employee was all excited about a game and sold the heck out of it, or even how we ordered too many and had a giant sale (which actually tends to push down a game, *cough* Lemming Mafia *cough*).

So why post it at all? It's kind of interesting to see. From a blog perspective, they're the most popular posts. Perhaps it's a heads up that you missed a game or a kind of wake up call to learn your cherished favorite is panned by our board game community. Feel free to chime in and discuss. That's what blogs are for, right?

Finally, I should mention that we're in a board game reboot phase at the moment, having dropped our selection from a high of about 1500 board and card games to roughly half that number. It's not that our sales are down, they're actually up in double digits. It's that sales have consolidated sharply into top sellers, with less risks taken with those one-off games, usually Euros. So we sell a ton more Settlers of Catan, but quite a bit fewer Z-man pretty good "seen at Essen" imports, for example. It's a little dangerous to cut your inventory so harshly when sales are up, but there was a lot of brush that needed to be cleared. That should also free us to ramp up heavily during the Fall, which is prime season for new releases. Why we held on to them for so long is a complex story involving competitors, local tastes, expectations of what we think we should carry, and the fact that I hate letting go of any game I know how to play.

Friday, September 23, 2011

Owning a game store can sometimes feel like being in the movie, The Matrix. With thousands of products on the shelves, it's difficult to know much about all of them, so they can fall into the category of "widget." We have as many products as your average Costco in about one percent of the space. Products have a cost, a profit margin, a turn rate, and oh yeah, they're games too, but that's not always relevant when you're looking at them.

When a product is a "one shot" release or like half our products, doesn't get re-ordered, it reinforces widgetness as there's no incentive to get to know them. Over time, if you're not vigilant, games can come and go without you having even read the summary on the box, which can make you a bit jaded. As for one shots, why should I care about what's in the latest Magic card pack that I can never re-order again that will sell out forever by the end of the day? Does it really matter? There's not even a sales need to know what's in the box. The green zeroes and ones clearly show on their black background.

When in Matrix mode, improvements or repairs on the property all look like expenses with no real benefit. Our employees are top notch, but as you fatigue you begin seeing hourly wages projected over their heads, sales per hour sliding by them and general overhead costs counting up like the national debt clock. You recall back when you ran the store yourself, forgetting all the amazing value employees add and the things they do that you would rather not.When things get really bad, when customers start to feel like zeroes and ones, I know it's time to for a break. Sometimes Michael sees it in me first (it has similar effect to cold medicine). Part of this Matrix mode is natural, as it's only by pounding down expenses in this tiny profit margin trade that we survive, let alone thrive. However, it's losing the spirit of the business, and that can't be tolerated.

The antidote is pretty simple, it turns out: Breaks and vacations. Breaks are the kinds of customer appreciation events like our recent Gamerati Game Day, which re-connect myself and staff to why we do this. It's about the customers and the games we love. The cool and really interesting thing about our game day event, as it turned out, was it really wasn't anything special. It was like someone gave us permission to have a game store block party. We had an impromptu sale, some fun open gaming, and a bunch of regular customers enjoying themselves, myself included. We need these kinds of events more often. Sometimes we get so close to the business that we lose focus.

As for vacations, I've learned they're not optional, self-indulgent or something only successful business owners do. They're a requirement to avoid the Matrix effect, of making a dull boy out of Jack. My best ones, like last week, are about unplugging from technology, breaking the work cycle, and letting the staff find the kinks in our process armor. This refining of process is actually pretty critical, to where an owner leaving for a while should really be a regular requirement. Process and crushing costs are all great in a small business, provided you can work on them while preserving the essential nature of the business, which should be joyous and full of wonder.